IRS tweaks for 2026
New 2026 tax rules include a deduction for overtime pay and updated reporting requirements, alongside references to a $75,000 standard deduction figure in recent coverage — lawmakers also tightened disclosure rules tied to certain HRAs. These changes could affect how small businesses structure overtime, track payroll and report deductions for employees or contractors. (marca.com)
The IRS’s Fact Sheet FS‑2026‑01 says “qualified overtime compensation” is limited to overtime required by the federal Fair Labor Standards Act and clarifies the deduction’s eligibility rules for tax years 2025–2028. (irs.gov)) The maximum annual overtime deduction is $12,500 for single filers and $25,000 for joint filers, and the deduction phases out when modified adjusted gross income exceeds $150,000 for singles and $300,000 for joint returns. (irs.gov)) The IRS and payroll experts say employers will have separate reporting obligations for qualified overtime and qualified tips on 2026 information returns, with draft 2026 W‑2 and W‑4 materials showing new reporting boxes and codes. (taxnews.ey.com) For tax year 2025 only, Treasury and the IRS issued Notice 2025‑69 to give workers methods to calculate the overtime and tip deductions when employers did not separately report those amounts on W‑2s or 1099s. (irs.gov)) The One Big Beautiful Bill Act introduced a new $6,000 “senior” deduction for taxpayers age 65+ (available 2025–2028) that begins to phase out at $75,000 of MAGI for single filers and $150,000 for joint filers. (irs.gov)) For employer health accounts, Revenue Procedure 2025‑19 set the 2026 inflation‑adjusted limits — including an excepted‑benefit HRA (EBHRA) maximum employer contribution of $2,200 for plan years beginning in 2026 — and EBHRAs must be offered on the same terms to all “similarly situated” employees and can trigger Form 5500/SPD and other ERISA disclosures in some cases. (irs.gov)) Payroll and benefits advisers warn employers to code FLSA‑required overtime separately now and to update payroll and benefits systems to capture new W‑2 reporting boxes and EBHRA eligibility notices ahead of 2026 filings. (shrm.org))
